Correlation Between Information Services and Exponent

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Can any of the company-specific risk be diversified away by investing in both Information Services and Exponent at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Information Services and Exponent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Information Services Group and Exponent, you can compare the effects of market volatilities on Information Services and Exponent and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Information Services with a short position of Exponent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Information Services and Exponent.

Diversification Opportunities for Information Services and Exponent

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between Information and Exponent is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Information Services Group and Exponent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exponent and Information Services is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Information Services Group are associated (or correlated) with Exponent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exponent has no effect on the direction of Information Services i.e., Information Services and Exponent go up and down completely randomly.

Pair Corralation between Information Services and Exponent

Considering the 90-day investment horizon Information Services Group is expected to under-perform the Exponent. In addition to that, Information Services is 1.33 times more volatile than Exponent. It trades about -0.02 of its total potential returns per unit of risk. Exponent is currently generating about -0.01 per unit of volatility. If you would invest  10,309  in Exponent on December 30, 2023 and sell it today you would lose (2,040) from holding Exponent or give up 19.79% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Information Services Group  vs.  Exponent

 Performance 
       Timeline  
Information Services 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Information Services Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.
Exponent 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Exponent has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest sluggish performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Information Services and Exponent Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Information Services and Exponent

The main advantage of trading using opposite Information Services and Exponent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Information Services position performs unexpectedly, Exponent can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Exponent will offset losses from the drop in Exponent's long position.
The idea behind Information Services Group and Exponent pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Check out your portfolio center.
Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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